Taksim Square, the site of a suicide bomb attack that wounded 32 people in the centre of Istanbul today. Photograph: Osman Orsal/Reuters

Suicide bombers carried out a rare attack on Istanbul today, targeting one of the city's most popular tourist spots and injuring at least 32 people.

The mid-morning blast in Taksim Square was timed to coincide with celebrations marking the anniversary of Turkey's foundation as a republic and caused shock around the country.

A western diplomat leaving a nearby hotel when the attack occurred described scenes of "shock, chaos and panic".

Huseyin Avni Mutlu, the city's governor, said 17 civilians and 15 police officers had been injured, two of them severely.

Not since 2003, when dozens of people were killed in al-Qaida-linked attacks on the British consulate, synagogue and HSBC bank headquarters, has Istanbul been targeted so brazenly.

Taksim Square is a major meeting place used by hundreds of thousands of people daily. Istiklal, the busy pedestrianised street which runs off it, was immediately closed after bomb squads discovered more explosive devices at the scene.

Riot police are on permanent guard in the square, which is also the site of a monument to Turkey's struggle for independence.

In a statement on television, Istanbul's police chief, Huseyin Capkin, said they believed the suicide bomber had tried to enter a police bus stationed in the plaza but that when thwarted "the explosives went off earlier". Local television stations showed the remains of a man believed to be the bomber. Dynamite had been strapped to his torso, according to reports.

"Such outrages are terrible in a great and confident city like Istanbul," said Canon Ian Sherwood, the British consulate chaplain, who remembers the attack on the diplomatic mission in which the consul general, Roger Short, was killed in 2003. "They strike daily at our sense of safety," he said.

It was not immediately apparent who was behind the attack. Suspicion fell on Kurdish rebel separatists who have staged suicide bombings against Turkish security forces in the past.

Security officials noted that the blast occurred on the day that a unilateral ceasefire declared by the Kurdistan Workers' party was due to expire.

Kurdish militants fighting for autonomy in Kurd-dominated south-eastern Turkey have fought the Turkish state for more than 25 years – a campaign that has cost the lives of over 30,000 people.

But other groups, including extreme leftwing organisations, have also staged attacks in Istanbul.

Under the Islamic-leaning government, relations with the Kurdish minority, which accounts for more than 15% of the population, have generally improved despite outbursts of sporadic violence.

"We will not tolerate anybody attacking the peace, stability and security of Turkey," he said.

But he insisted the violence would "in no way" prevent Turkey from achieving "its goals of unity, brotherhood and development … as long as our brotherhood lasts, these games will come to nothing," he said.